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The American economy, dear reader, currently finds itself in quite a peculiar state.
While billionaires revel at events like fashion week and the Super Bowl, lower-income folk tighten their belts. The well-off book plush airplane seats and indulge their pets, yet others choose cheaper groceries and worry about credit card limits.
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An income divide
Historically, lower earners saw wages rise faster than higher earners, notably during the Great Resignation. Yet, by 2024, this trend shifted, with high earners pulling ahead. Wage growth disparities have now reached a peak not seen since 2015. Meanwhile, economic indicators like GDP growth seem to favour higher earners.
The complex tax landscape adds another layer. Policy changes may offer broader refunds, but high earners likely benefit more. Economist Ksenia Bushmeneva notes that new tax policies skew towards middle- and upper-income households. More on wages and tax changes can be read here.
Spending and groceries
For those at the lower end of the economic spectrum, organic produce and theatre tickets might be forgone luxuries. Cost-of-living pressures mean that even as salaries rise, so do prices. The data shows lower earners feel this pinch more keenly.
At grocery stores, spending habits diverge. Higher earners splurge on top-tier meat and beverages. In contrast, those earning less tend to cut back on baking supplies. As Jack O’Leary of NIQ points out, consumers now prioritize calories per dollar. For more on consumer trends, visit NielsenIQ.
Credit stress
Credit card debt has swelled, touching $1.28 trillion by late 2025. Alas, those at the lower income echelons feel the weight more. A Federal Reserve Bank of New York report highlights this growing strain.
Overall, while household finances are stronger now than pre-financial crisis times, lower earners still struggle. An analysis by the Federal Reserve Bank of St. Louis revealed that credit card debts in poorer postcode areas risk delinquency far more than their affluent counterparts. More details can be found here.
A K among workers in different places in their careers
A curious division exists among workers too. Recent college graduates, defined here as 22 to 27-year-olds, face higher unemployment rates than older workers. This gap, widening since the pandemic, stands at 1.3 percentage points now. For further exploration, the employment situation report is available here.
Meanwhile, job markets vary widely across sectors. Although healthcare payrolls dipped in February, the sector remains sturdy compared to white-collar professions.
As this tale of economic two halves unfolds, we ask you, dear reader: Are you altering your spending habits? Share your story with the reporters via jkaplan@businessinsider.com and mhoff@businessinsider.com.
